Friends and family can help an investor when it comes to selecting a financial advisor.
The hope is that when an investor is selecting a financial advisor, he or she will make a decision that will last for years.
With that in mind, the selection process needs to be complete.
But the process is not easy, because there are thousands of possible financial advisors to choose from. Investors must first know what they want when they are selecting a financial advisor.
There are many different kinds of financial advisors offering many different types of financial products. An investor must decide if they want an advisor to help with investments, suggest investments, or just manage and grow the funds they have with an eye toward retirement or future financial needs. They must also determine how they want to be charged for services - by a consistent fee or by a commission on investments made.
Experience is a factor in the investment advisor search, and with experience comes certifications and licenses. Most advisors will list their certifications and other information that proves their knowledge and expertise. Experience does come with a price, and established advisors will perhaps have higher fees than a younger advisor.
Responsiveness to a request for information and contact methods are also key considerations when conducting an investment advisor search. According to Spectrem’s Millionaire Corner study Relationship with Advisors, 60 percent of Millionaires feel “not being proactive in contact” is a reason to change advisors, and 63 percent said “not returning phone calls in a timely manner” could get an advisor bounced.
If an investor gets to the point where they know what they want an advisor to do for them, they next need to come up with some names.
In the Relationship with Advisors study, 48 percent of investors found their advisor through a referral from friends or family. This is considered a wise way to go, as close relations are not likely to steer you wrong, although you may need to ask what types of work the advisor does for them to see if it lines up with your own needs.
Nine percent of Millionaires found their advisor because the advisor made first contact. Eight percent found the advisor through a seminar or special event.
Once an investor has some candidates in mind, the next step is an interview. Most successful advisors have success stories to tell, and will offer details on their success as an advisor as well as testimonials from satisfied clients.
The Securities and Exchange Commission suggests an investor find out how an advisor is paid (by fee or by commission), the services offered, the products offered, and whether the advisor is licensed, registered or certified with either the state, the SEC or the Federal Industry Regulatory Authority.
The SEC also offers information about complaints against financial advisors. When conducting an investment advisor search, sometimes a direct question to an advisor can also provide insight into complaints against him or her, and how they handled such complaints.
Selecting a financial advisor is not easy, but it is worth the effort. Most investors form a long relationship with the person who handles their financial decisions, and making the right choice allows an investor to avoid the difficult transition process to a different financial advisor.
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Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.